The defense sector in the State: more money than ever and more entangled

MadridThe State is investing more money than ever in defense. In fact, it had committed to spending 2% of GDP and would have already exceeded it, according to NATO confirmation at the end of February. But when the pie of resources is bigger than ever, the sector is also more tangled than ever. Perhaps precisely because there has never been so much money at stake. "For the last 25 years this has been stagnant and there has been no budget," say a large company in the sector that depends, like the rest, on defense ministry contracts.

The money being spent drop by drop by Pedro Sánchez's government does not reach Congress, which is approving allocations in council of ministers that do not need the approval of the Spanish lower house –for example, through direct transfers. In any case, the trace remains in the references of each conclave. Among all the allocations, those of the Industrial and Technological Plan for Security and Defense announced last April and valued at 10,471 million euros stand out. valued at 10,471 million euros.

However, part of this money is bogged down in the Supreme Court after the company Santa Bárbara Sistemas, a Spanish subsidiary of the American General Dynamics, decided to file a lawsuit against one of the decrees, feeling excluded from the negotiation of contracts with the Ministry of Defense and Industry. The money in dispute – these are loans worth 3,000 million at 0% interest, but the figure could rise to 7,240 million if the process ends up involving more contracts – was awarded to Indra and Escribano Mechanical & Engineering (EM&E), and the Supreme Court now has to decide whether to accept the suspension of the award as a precautionary measure.

But in the midst of this tug-of-war between Santa Bárbara, Indra and EM&E, Indra has just ushered in a new phase, its third in just five years, with the appointment of Ángel Simón as non-executive chairman following the resignation of Ángel Escribano, who had a prior clash with the General Dynamics subsidiary over its potential purchase.who had a prior clash with the General Dynamics subsidiary over its potential purchase. Unraveling the conflict will, in fact, be one of Simón's challenges. "The spirit of Santa Bárbara has always been one of dialogue and commitment to cooperation," say company sources.

the government has just launched a program called Dual Technology & Industry Readiness Programmesoftware and systems integration. But also with the signing of a strategic pact with the company Gutmar.

However, the fear that this trickle-down effect will not occur is latent in the sector, particularly in this auxiliary industry, but also in regions like Catalonia where the Generalitat has shown itself determined to capture a portion of the resources the State wants to invest in defense. In fact, the government has just launched a program called Dual Technology & Industry Readiness Programmeto introduce SMEs in the automotive, space, metallurgy, and machinery sectors into the defense market.

What future for Indra?

Meanwhile, Indra, which is the one aspiring to be a tractor company, or so the Spanish government wants it to be –it is the main shareholder with 28% of the share capital through SEPI–, is just starting the Ángel Simón era, who this week disembarked at the company. The executive arrives sponsored by SEPI, which is the main shareholder, as his predecessors did: Marc Murtra and Ángel Escribano, although the latter has left due to tensions, precisely, with Pedro Sánchez's executive team over the possible integration, currently derailed, between Indra and EM&E, a company that Escribano founded with his brother and which, in turn, holds 14% of Indra's share capital.

For now, Ángel Escribano's seat at Indra –he has also left the board of directors where EM&E has two seats–, is empty. "Nothing has been decided," indicate EM&E sources about who will occupy the position. They also assure that no firm interest has arrived on the table from Rheinmetall. The German military giant would have been interested in acquiring the Escribano brothers' company after the failed operation with Indra, according to various media outlets. In fact, both companies know each other from having submitted joint proposals to the Ministry of Defense. In any case, Indra and EM&E would not have completely buried the purchase option, according to sources familiar with the process told Europa Press. EM&E has declined to comment on whether the talks have resumed now that Ángel Escribano is no longer president –he was one of the obstacles for SEPI, that is, for the Spanish government, which ended up seeing a conflict of interest.

Simón will continue to be accompanied by José Vicente de los Mozos, the CEO and "top executive" of the company, as he has retained executive functions. After the earthquake at the top, De los Mozos did not hesitate to send a message of "calm and strength," especially to the market. "Indra is at its best moment. We have a strategic plan that we are fulfilling and have surpassed [...] The time has come to give it a new boost," the executive wrote through his LinkedInprofile.